How to find ‘strong buy’ stocks that are trading near their highs to start 2022
Monday looked set to mark a continuation of a huge sell-off that started early last week, with the Nasdaq down more than 2.5% at one point. But buyers stepped in as it started to move closer to its 200-day moving average and the tech-heavy index finally ended the day slightly positive.
Massive sales in early 2022 were driven by growth names more sensitive to higher interest rates. Wall Street started selling more strongly last week after the Fed signaled it could start raising interest rates sooner in a much more belligerent turn amid rising prices.
The technological rebound that began Monday afternoon continued on Tuesday, with the Nasdaq up 1.2% early in the afternoon. Meanwhile, the S&P 500 jumped 0.65% to climb above its 50-day moving average, as Wall Street appears to be comfortable with that resistance level (or roughly so) for the benchmark over the past year.
The recent rebound could indicate that investors find it hard to imagine that stocks won’t remain the best place to park their money even if interest rates rise faster.
Many hurdles remain in 2022. Fortunately, there are many forces operating in the market that are still quite bullish for stocks. Additionally, history suggests Wall Street could be heading for another solid year after its impressive run.
With that in mind, let’s dive into a screen that helps find the top-ranked stocks that are trading at or near their highs. The screen could be useful for several reasons …
Image source: Zacks Investment Research
Don’t be afraid of new heights
Some investors might prefer not to buy stocks at new highs. But if someone were to ask you which stocks are the best in your portfolio, chances are you would name the stocks that are growing the most.
The most basic idea is that the winners in your portfolio are the ones who increase. If a stock is underperforming the market or going down, you’ll quickly identify it as one of your worst holdings. Therefore, it makes sense that some of these stocks are reaching new heights along the way.
Many investors are reluctant to buy stocks reaching new 52 week highs. But there really is no reason to be. Some may worry about having missed the mark already by then or that it now has more room to fall. Yet a stock hitting a new 52 week high is a “good thing”, just as a stock falling to a new 52 week low is a “bad thing”.
On top of that, would the person who doesn’t want to buy stocks hitting new highs be upset if a stock they own hits a new 52 week high? Statistics have also shown that stocks reaching new highs tend to reach even higher highs. And aren’t these the actions we all dream of?
Now obviously the fundamentals need to be there, and you should try to keep an eye out for valuations. But if you were in a stock making new highs and cheering it on, it seems odd to be afraid that a stock would do the same just because you haven’t bought it yet.
Think about it: a stock just hit a new 52 week high, which is great news. Guess what? Last year it also hit a new 52-week high. And the year before. And the year before. Can you imagine all the money you would leave on the table if you were afraid to be in stocks every time they hit a new high?
• Current / highest price over 52 weeks greater than or equal to 0.80
• Percentage of price variation over 12 weeks greater than 0
• Percentage of price variation over 4 weeks greater than 0
• Zacks rank equal to 1
• Price / sales ratio less than or equal to the industry median
• P / E (using F1 estimates) less than or equal to the industry median
• EPS growth projected over one year F (1) / F (0) greater than or equal to the industry median
• Avg. current. 20-day volume higher than the previous week’s average. 20 day volume
• All of the above settings are applied to shares with a price greater than or equal to $ 5 and a 20-day average volume greater than or equal to 100,000 shares.
• Percentage of price change over 12 weeks + Percentage of price change over 4 weeks equal to the Top 5
Here are two of the five actions that have appeared on today’s screen …
Titan International TWI
Titan International is one of the world’s leading manufacturers of off-road wheels, tires, assemblies and undercarriage products. Titan International manufactures a wide range of products to meet the specifications of original equipment manufacturers and aftermarket customers in the agriculture, earthmoving / construction and consumer markets.
Shares of TWI recently skyrocketed and rose 70% in the past 12 months to explode its industry average. Titan International is part of the Zacks Manufacturing-Farm Equipment space which currently ranks in the top 9% of over 250 of our industries. TWI’s top and bottom growth outlook looks strong and it currently has an overall VGM rating of “A”.
Hilton Grand Vacations VHG
Hilton Grand Vacations is one of the world’s leading timeshare companies headquartered in Orlando, Florida. HGV is one of Hilton’s top 18 brands and the Company’s ownership offers premier membership programs, currently providing exclusive services and maximum flexibility to 710,000 owners worldwide.
Hilton Grand Vacations stock has grown 62% in the past year to crush its hotel and motel industry which is in the top 25% of our Zacks industries. In addition, the growth prospects for heavyweights are strong as people once again ask to step away.
Get the rest of the stocks on this list and start looking for the most recent companies that match those criteria. It is easy to do. And it could help you find your next big winner. Start researching these companies today with a free trial of the Search Assistant. You can do it.
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Disclosure: Officers, directors and / or employees of Zacks Investment Research may own or have sold securities short and / or hold long and / or short positions in options mentioned in this document. An affiliated investment advisory firm may own or have sold securities short and / or hold long and / or short positions in options mentioned in this document.
Disclosure: Information on the performance of Zacks’ portfolios and strategies can be found at: https://www.zacks.com/performance/.
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